Banks, firms, and jobs

Fabio Berton, Sauro Mocetti, Andrea Presbitero and Matteo Richiardi

No 1097, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Unemployment is one of the most visible effects of financial crises. We contribute to the empirical literature on the employment effects of a decline in bank credit, investigating individual heterogeneity across firms, workers and jobs in response to a financial shock. We use a rich data set of over 1.5 million individual job contracts in an Italian region, which is matched with the universe of firms and their lending banks. To isolate the effect of the financial shock we construct a firm-specific time-varying measure of credit supply. Our findings indicate that a 10 percent supply-driven credit contraction reduces employment by 2.5 percent. The effect is mostly concentrated among relatively less-educated and less-skilled workers with temporary contracts, and is consistent with the presence of a “dual” labor market and a skill-upgrade strategy adopted by firms in response to the financial shock.

Keywords: bank lending channel; job contracts; employment; financing constraints; skill upgrade (search for similar items in EconPapers)
JEL-codes: G01 G21 J23 J63 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-ban and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Banks, Firms, and Jobs (2018)
Working Paper: Banks, Firms, and Jobs (2017)
Working Paper: Banks, firms and jobs (2017)
Working Paper: Banks, Firms, and Jobs (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1097_17

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